I was thinking of actually baking this one, but man, whos got the time?

I have one of those vertically oscillating sprinklers; you know the kind, one row of jets on a bent hollow tube.
Well the one I've got is a bit hooped and when the water pressure is too low, it sticks in place and
will not resume watering my lawn until someone gives it a good kick or a flip of the hose.

I was attempting the hose flip thing when the whole sprinkler spun upside down and began hovering about three feet off the ground with a good six feet of hose between it and myself. I found that I could control left, right, up, and down movements by simply turning or tilting my wrist, and spent the better part of the next half hour chasing around the my kids, my wife, the dog, pretty much anything that came within range. It was quite a bit of fun and gave me the idea for making W.F.O's

The toys would look like traditional disk shaped U.F.O's and there would be two of them connected to a garden hose on a splitter. Each hose on the splitter would gradually decrease in diameter to create increased water pressure, and each W.F.O. would have its own Nintendo "looking" controller.

By cutting the water pressure to any one of four quadrants in the disk, the toy will move in any direction desired. Controlling the total volume of water will make the toys climb or descend.

I think that kids would have a riot dog fighting these things. They could even come equipped with an oscillating water cannon to shoot at each other.

I was all set to rain on this idea at first glance, thinking it was just an update on the toy that was so popular with kids in the 1950's (See link) ... But, reading it all the way through, I think you've got a terrific idea, and I didn't come up with anything very similar on a quick [though hardly exhaustive] Google search. First question: will several W.F.O.s actually be able to be powered off the same 70-100 psi standard home water faucet? I think being able to mount the kind of competitive flying contests that you describe would greatly add to the play value of this toy. In any case, it really does have marketable toy potential. Don't dismiss the idea lightly until you've at least done a proper patent check.

"The Water Wiggle cooled us down alright, typically by wrapping himself around our necks and punching us repeatedly in the head. Frankly, it's hard to be bothered by the heat while unconscious." - the Salt Lake Tribune

Hopefully, [-2fries]' version with remote control will be a bit more friendly.

Yeah...Googling on "hose toy" I came across a link about the consumer complaints Wham-O got into with their toy. I'm sure that slightly more sophisticated product engineering and more cautionary packaging could have avoided some of the problems they experienced. (link to Wham-O/CPSC provided)

Jurist, I would love to be able to bring this, (and about fifty other, profitable ideas), to market, But I have a hard time paying the equivalent of ten grand per country to obtain a piece of paper which says that the idea is mine and I better do something with it in the next seven years.
I went through this process once trying to obtain a patent on a remote control dragonfly. It took months to build from cannibalized remote control car parts. I had a patent search done, (nothing even close). I found a company willing to put up the money for the patent, manufacture the toy at a separate company which they owned in China, and market it back here in North America.

The Naval research laboratories in the States beat me to the punch by two months. I am just glad that it wasn't my own money on the line.

You could take this type of flying toy and make the body out of a more durable, light material such as plastic and run a circular water vein around the diameter.

The water vein has pressure holes (Large tube, small opening) every centimeter running along the outside of the toy.
The pressure holes point in a spiral direction in which it will shoot water out of the holes in order to get the toy spinning and airborne.
Like you said a Nintendo like controller could possibly control the direction of the pressure holes in order to fly it around. OR it could control fins or whatever works in order fly it to optimum performance.

Like you said the controller could also control a release valve that works as a water cannon in which kids can fly the craft and aim the water cannon at their friends at the same time.

If this worked it would create a giant spiral of water, which would not only be fun and look cool, but it would do a good job of watering your lawn.

A helicopter version would be good.

If you really went overboard you seriously use it to water your lawn by setting in your lawn perimeter coordinates and have it automatically fly around and water your lawn. (As seen with those robotic lawn mowers and vacuum cleaners)